Reporter's dig reveals a 9/11 scholarship program in name only

In this April 21, 2012, photo, Candice Hoglan poses for a portrait with her vehicle with a license plate commemorating the events of Sept. 11, 2001, in Sunnyvale, Calif. Hoglan's nephew Mark Bingham was one of the passengers of United Airlines Flight 93, which was hijacked by terrorists on Sept. 11. After the 2001 terrorist attacks, California lawmakers sought a way to channel the patriotic fervor and use it to help victims' families and law enforcement. Their answer: specialty memorial license plates emblazoned with the words, “We Will Never Forget.” (AP Photo/Marcio Jose Sanchez)

In this June 5 note to The Associated Press staff, AP Senior Managing Editor for U.S. News Mike Oreskes recounts how a statehouse correspondent’s dig into California’s specialty license plate program – and a commemorative 9/11 plate in particular – turned up a stunning accountability story that dominated California news for two days, including at least 12 front pages.

Hannah Dreier was in just the third week of her temporary assignment as California legislative relief when her editor, Tom Verdin, suggested she look into the state's popular specialty license plate program established in 1992. Was the money it generated really going where it was supposed to?

No one had ever done an audit, so Dreier dived into her own investigation, working through multiple government entities, filing public records requests and reconciling conflicting data -- all while juggling the usual heavy load of daily legislative copy.

She soon decided to focus on the 9/11 memorial plate, a hunch that paid off in the Beat of the Week for an accountability story that dominated California for two days.

Dreier found that only a fraction of revenue from the 9/11 plates -- $80,000 of the $15 million raised -- had been used for college scholarships for children of those who died in the 2001 terrorist attacks. Legislation creating the plates had earmarked 15 percent, $2.25 million, for scholarships.

Instead, Gov. Jerry Brown and his predecessor, Arnold Schwarzenegger, had raided the fund for $3 million to help plug budget deficits.

Reaction was immediate. The state Department of Motor Vehicles removed the reference to scholarships from its description of the memorial fund and apologized for the misrepresentation. Brown ordered an audit, and a key lawmaker announced a legislative inquiry.

The 9/11 plates were a logical target. Emblazoned with the words "We Will Never Forget," they made the most emotional appeal, and they had the least oversight of 10 specialty plates in the $250 million program.

While money from all the other plates went to specific agencies and nonprofits, 9/11 plate revenue fed into a special antiterrorism fund to be used for vaguely defined activities.

Dreier discovered that no agency was responsible for ensuring the money was being spent as promised, and she spotted numerous discrepancies between agencies that distributed the money.

The state treasurer's website said that only $20,000 in scholarship money had been distributed and that the scholarship program actually ended in 2005, even though the DMV's website still promoted it.

Dreier searched the state's website and found millions of dollars in loans from the fund buried in hundreds of pages of budget documents from 2008 and 2011.

At that point, she started trying to account for every dollar of the $15 million the plate had raised. Information from the half-dozen agencies sharing the money often conflicted. For instance, the Department of Finance said $1.1 million had gone to the scholarships, but further back-and-forth between Finance and the state treasurer's office revealed that most of that money had actually been transferred back.

The Department of Food and Agriculture waited eight weeks to respond to a public records request and then, the night before the story was set to run, sent 50 pages of itemized budget reports accounting for millions of dollars. The state Emergency Management Agency also sent hard-to-follow budget documents, after several requests. An executive finally explained the spending.

Play was extraordinary: at least 12 front pages in California and an A1 column in the Los Angeles Daily News; a five-minute national segment, with full AP credit, on Fox News; radio interviews with Dreier on KPPC in Pasadena and KABC and KRLA in LA.